RATINGS: See RATINGS herein. BOOK-ENTRY ONLY

Transcription

1 NEW ISSUE RATINGS: See RATINGS herein. BOOK-ENTRY ONLY In the opinion of Squire, Sanders & Dempsey L.L.P., Bond Counsel, under existing law (i) assuming continuing compliance with certain covenants and the accuracy of certain representations, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and (ii) interest on the Bonds is exempt from Arizona state income tax. Interest on the Bonds may be subject to certain federal taxes imposed only on certain corporations, including the corporate alternative minimum tax on a portion of that interest. For a more complete discussion of the tax aspects, see TAX MATTERS herein. $150,935,000 THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY OF SCOTTSDALE, ARIZONA HOSPITAL REVENUE REFUNDING BONDS (SCOTTSDALE HEALTHCARE) SERIES 2008A Dated: Date of Delivery Due: September 1 as set forth below The above-captioned bonds (the Bonds ) will be limited obligations of The Industrial Development Authority of the City of Scottsdale, Arizona (the Authority ) secured under the provisions of a Bond Indenture dated as of March 1, 1996, as supplemented (the Bond Indenture ), including as supplemented by a Supplemental Bond Indenture dated as of May 1, 2008, between the Authority and The Bank of New York Trust Company, N.A., as successor trustee (the Bond Trustee ), payable from and secured by a pledge of payments to be made under the corresponding Loan Agreement dated as of March 1, 1996, as amended and supplemented (the Loan Agreement ), including as supplemented by a Supplemental Loan Agreement dated as of May 1, 2008 (the Supplemental Loan Agreement ) between the Authority and Scottsdale Healthcare Hospitals (formerly known as Scottsdale Memorial Hospitals), an Arizona nonprofit corporation (the Corporation ). The obligations of the Corporation under the Supplemental Loan Agreement will be evidenced by a promissory note issued under the Master Indenture, dated as of October 15, 1987, as amended and supplemented, by and among the Corporation, Scottsdale Healthcare Corp., an Arizona nonprofit corporation ( SH Corp. ), Scottsdale Healthcare Realty Corp., an Arizona nonprofit corporation ( Realty ), and Scottsdale Captive Insurance Company, an Arizona nonprofit corporation ( Captive and, together with the Corporation, SH Corp. and Realty, the Obligated Group ), and U.S. Bank National Association, as master trustee (the Master Trustee ). Interest on the Bonds is payable semiannually on each September 1 and March 1, commencing on September 1, The Bonds are issuable only in registered form, and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ( DTC ), New York, New York, an automated depository for securities and clearing house for securities transactions. DTC will act as securities depository for the Bonds. Individual purchases will be made in book-entry form only in denominations of $5,000 or any integral multiple thereof. Purchasers of the Bonds will not receive certificates representing their interests in the Bonds purchased. So long as DTC or its nominee is the registered owner of the Bonds, payment of the principal of, premium, if any, and interest on the Bonds will be made directly by the Bond Trustee to DTC, which will in turn remit such payments to its Participants, which will in turn remit such payments to the Beneficial Owners of the Bonds as described herein. See Appendix F BOOK-ENTRY ONLY SYSTEM attached hereto. MATURITIES, CUSIPS, INTEREST RATES, PRICES AND YIELDS $91,445,000 Serial Bonds Maturity September 1 Principal Amount Price Interest Rate Yield CUSIP $4,970, % 5.00% 2.73% FE ,240, FF ,450, FG ,585, FH ,885, FJ ,150, FK ,315, FL ,670, FM ,880, FN ,220, FP ,560, FQ ,885, * FR ,160, * FS ,590, * FT ,880, * FU ,005, FV7 $59,490, % Term Bonds due September 1, 2030, Price: % to Yield 5.52% CUSIP FW5 The Bonds are subject to optional, mandatory and extraordinary redemption prior to maturity on the dates and under the circumstances described in this Official Statement. THE BONDS WILL NOT CONSTITUTE GENERAL OBLIGATIONS OF THE AUTHORITY, THE CITY OF SCOTTSDALE, THE STATE OF ARIZONA, OR ANY POLITICAL SUBDIVISION THEREOF, AND WILL NOT DIRECTLY OR INDIRECTLY OBLIGATE THE CITY OF SCOTTSDALE, THE STATE OF ARIZONA, OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY ANY FORM OF TAXATION THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT. THE AUTHORITY HAS NO TAXING POWER. This cover page contains certain information for quick reference only. It is not intended to be a summary of the security or terms of these issues. Investors are instructed to read the entire Official Statement to obtain information essential to the making of an informed investment decision. The Bonds are offered when, as and if issued by the Authority and received by the Underwriter, subject to prior sale, to withdrawal or modification of the offer without notice, and subject to receipt of approving legal opinions of Squire, Sanders & Dempsey L.L.P., Phoenix, Arizona, Bond Counsel. Certain legal matters will be passed upon for the Obligated Group by its counsel, Squire, Sanders & Dempsey L.L.P., Phoenix, Arizona, for the Authority by its counsel, Sallquist, Drummond & O Connor, P.C., and for the Underwriter by its counsel, Sonnenschein Nath & Rosenthal LLP, Chicago, Illinois. It is expected that the Bonds in book-entry form will be available for delivery through the facilities of DTC on or about June 4, Date: May 15, 2008 CITI 1 Copyright 2007, American Bankers Association. CUSIP is a registered trademark of the American Bankers Association. * Yield to call date of September 1, 2018

2 This Official Statement (the Official Statement ) does not constitute an offer to sell the Bonds or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any state or other jurisdiction to any person to whom it is unlawful to make such offer, solicitation or sale in such state or jurisdiction. No dealer, broker, salesperson or any other person has been authorized to give any information or to make any representation other than those contained herein in connection with the offering of the Bonds, and, if given or made, such information or representation must not be relied upon. The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with and as part of its responsibility to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information relating to DTC and the book-entry system set forth herein under the caption THE BONDS General and in APPENDIX F BOOK-ENTRY ONLY SYSTEM hereto has been furnished by DTC. Such information is believed to be reliable but is not guaranteed as to accuracy or completeness and is not to be construed as a representation by the Underwriter or the Authority. All other information set forth herein has been obtained from the Authority and other sources (other than the Authority) that are believed to be reliable, but such information is not guaranteed as to accuracy or completeness and is not to be construed as a representation by the Authority or the Underwriter. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale of the Bonds made hereunder shall create under any circumstances any indication that there has been no change in the affairs of the Authority, the Obligated Group or DTC since the date hereof. This Official Statement is submitted in connection with the issuance of securities referred to herein and may not be used, in whole or in part, for any other purpose. The Bonds have not been registered under the Securities Act of 1933, as amended, and the Bond Indenture and the Master Indenture have not been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon exemptions contained in such acts. The registration or qualification of the Bonds in accordance with applicable provisions of laws of the states in which Bonds have been registered or qualified, and the exemption from registration or qualification in other states cannot be regarded as a recommendation thereof. Neither these states nor any of their agencies have passed upon the merits of the Bonds or the accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal offense. The Bond Trustee assumes no responsibility for the Official Statement and has not reviewed or undertaken to verify any information contained herein. The CUSIP numbers are included in this Official Statement for the convenience of the Holders and potential Holders of the Bonds. No assurance can be given that the CUSIP numbers for the Bonds will remain the same after the date of issuance and delivery of the Bonds. In connection with the offering of the Bonds, the Underwriter may overallot or effect transactions that stabilize or maintain the market price of the Bonds offered hereby at levels above that which otherwise might prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS IN THIS OFFICIAL STATEMENT Certain statements included or incorporated by reference in this Official Statement constitute forward-looking statements. Such statements generally are identifiable by the terminology used, such as plan, expect, estimate, budget or other similar words. Such forward-looking statements include but are not limited to certain statements contained in the information under the captions INTRODUCTION The Loan Agreement; Use of Proceeds and PLAN OF FINANCE in the forepart of this Official Statement and the statements contained under the caption INFORMATION REGARDING THE CORPORATION AND OTHER MEMBERS OF THE OBLIGATED GROUP MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS in APPENDIX A. The achievement of certain results or other expectations contained in such forward-looking statements involves known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Neither the Authority nor the Corporation plans to issue any updates or revisions to those forward-looking statements if or when its expectations or events, conditions or circumstances on which such statements are based occur. -i-

3 TABLE OF CONTENTS Page INTRODUCTION... 1 THE AUTHORITY... 5 PLAN OF FINANCE... 6 ESTIMATED SOURCES AND USES OF FUNDS... 7 ANNUAL DEBT SERVICE REQUIREMENTS... 8 THE BONDS... 9 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS BONDHOLDERS RISKS CONTINUING DISCLOSURE LEGALITY FOR INVESTMENT ABSENCE OF MATERIAL LITIGATION LEGAL MATTERS LIMITED OBLIGATIONS TAX MATTERS UNDERWRITING INDEPENDENT AUDITORS RATINGS RELATIONSHIPS AMONG PARTIES MISCELLANEOUS APPENDIX A INFORMATION REGARDING THE CORPORATION AND OTHER MEMBERS OF THE OBLIGATED GROUP APPENDIX B SCOTTSDALE HEALTHCARE CORP. AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2007 AND 2006 APPENDIX C DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF PRINCIPAL DOCUMENTS APPENDIX D PROPOSED FORM OF OPINION OF BOND COUNSEL APPENDIX E FORM OF CONTINUING DISCLOSURE AGREEMENT APPENDIX F BOOK-ENTRY ONLY SYSTEM

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5 OFFICIAL STATEMENT $150,935,000 THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY OF SCOTTSDALE, ARIZONA HOSPITAL REVENUE REFUNDING BONDS (SCOTTSDALE HEALTHCARE) SERIES 2008A INTRODUCTION The following introductory statement is subject in all respects to the more complete information set forth in this Official Statement (the Official Statement ). The descriptions and summaries of various documents hereinafter set forth do not purport to be comprehensive or definitive and are qualified in their entirety by reference to each document. All capitalized terms used in this Official Statement and not otherwise defined herein, in APPENDIX C, have the same meaning as in the hereinafter described Bond Indenture, Loan Agreement or Master Indenture (each as defined below). See APPENDIX C DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF PRINCIPAL DOCUMENTS. Purpose of this Official Statement This Official Statement, including the cover page and the Appendices hereto, is provided to furnish information in connection with the offering of $150,935,000 aggregate principal amount of Hospital Revenue Refunding Bonds (Scottsdale Healthcare) Series 2008A (the Bonds ) to be issued by The Industrial Development Authority of the City of Scottsdale, Arizona (the Authority ). The Authority The Bonds will be issued by the Authority. The Authority was created pursuant to the Arizona Act, defined below, as a body corporate and politic, and is empowered to enter into loan agreements, contracts, deeds and other instruments for the purpose of financing or refinancing certain facilities, including medical facilities and other facilities owned and operated or used by organizations described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the Code ), to the end that the Authority may protect and promote the health and welfare of the inhabitants of the State of Arizona, and to issue its revenue bonds for the purpose of carrying out any of its powers. The Indenture; The Trustee The Bonds will be executed, delivered and secured pursuant to Title 35, Chapter 5, Arizona Revised Statutes, as amended (the Arizona Act ), and a Supplemental Bond Indenture dated as May 1, 2008 (the Supplemental Indenture ), supplementing a Bond Indenture dated as of March 1, 1996, such Bond Indenture (as previously supplemented, the Original Bond Indenture, and together with the Supplemental Indenture, the Bond Indenture ), between the Authority and The Bank of New York Trust Company, N.A., as successor trustee (the Bond Trustee ). The Loan Agreement; Use of Proceeds The Authority will lend the proceeds of the sale of the Bonds to Scottsdale Healthcare Hospitals (formerly known as Scottsdale Memorial Hospitals), an Arizona nonprofit corporation organized under the laws of the State of Arizona (the Corporation ), pursuant to a Supplemental Loan Agreement, dated as of May 1, 2008 (the Supplemental Loan Agreement ) between the Authority and the Corporation, supplementing a Loan Agreement dated as of March 1, 1996, which Loan Agreement, as previously

6 supplemented, is referred to as the Original Loan Agreement, and such Original Loan Agreement, together with the Supplemental Loan Agreement, is referred to herein as the Loan Agreement. In the Loan Agreement, the Corporation has promised to make payments sufficient to pay principal, premium, if any, and interest on the Bonds when due. The Corporation will use the proceeds of the sale of the Bonds to: (1) refund all of the Authority s outstanding Hospital Revenue Bonds (Scottsdale Healthcare) Series 2006A (the Series 2006A Bonds ) and Series 2006B (the Series 2006B Bonds and, together with the Series 2006A Bonds, the Series 2006A/B Bonds ) and the Authority s outstanding Hospital Revenue Refunding Bonds (Scottsdale Healthcare) Series 2007A (the 2007A Bonds and, together with the 2006A/B Bonds, the Refunded Bonds ), (2) pay all or a portion of the expenses incurred in connection with the issuance and delivery of the Bonds and the refunding of the Refunded Bonds, including any swap termination fees. See PLAN OF FINANCE and ESTIMATED SOURCES AND USES OF FUNDS herein. The Obligated Group The Corporation was organized in The Corporation is governed by a Board of Directors currently comprised of 17 voting members. Certain major corporate actions of the Corporation, including the incurrence of long-term debt and certain capital expenditures, require the approval of the Board of Directors of Scottsdale Healthcare Corp. ( SH Corp ). The Corporation owns and operates a 337 licensed bed general hospital located in downtown Scottsdale, Arizona ( SH-O ), approximately ten miles east of downtown Phoenix, Arizona, and a separate general hospital, currently with 405 licensed beds located in Scottsdale, Arizona ( SH-S ), approximately ten miles north of SH-O. The land on which SH-S is located is owned by SH Corp. and is leased to the Corporation pursuant to a ground lease. In November 2007, the Corporation opened a third general hospital in the Scottsdale area, Scottsdale Healthcare - Thompson Peak (SH-TP). SH-TP is located approximately 10 miles north of SH-S and has 64 licensed beds, shelled space for up 128 beds and capacity to expand to 184 beds. In addition to the hospital, several medical buildings have opened on the campus. The construction of SH-TP was completed on budget and schedule. The Corporation provides inpatient acute-care services for medical, surgical, pediatric and obstetrics patients, as well as critical care services in its intensive care and coronary care units. To support these inpatient services, the Corporation provides various ancillary and support services including comprehensive clinical laboratory services, diagnostic and therapeutic radiology, respiratory therapy, electrocardiography, electroencephalography, pharmacy, physical therapy, comprehensive emergency services and a full range of outpatient services. SH Corp., an Arizona nonprofit corporation, was formed in 1981 and became the sole corporate member of the Corporation shortly thereafter. In 1998 SH Corp. changed its previous name, Scottsdale Memorial Health Systems, Inc., in a corporate restructuring to represent diversification beyond the scope of a single hospital. In connection with the issuance of the Bonds, the Corporation, SH Corp., Scottsdale Healthcare Realty Corp. (formerly known as Scottsdale Memorial Realty Co., Inc., an Arizona nonprofit corporation -2-

7 ( Realty ) and Scottsdale Captive Insurance Company, an Arizona nonprofit corporation ( Captive and, together with the Corporation, SH Corp. and Realty, collectively, the Obligated Group and each a Member ) will deliver the Series 16 Note (defined below) to the Bond Trustee to evidence and collateralize the obligation of the Corporation to pay debt service on the Bonds and to maintain the Reserve Fund under the Bond Indenture. See APPENDIX A hereto for a description of the Corporation and the other Members of the Obligated Group and APPENDIX B hereto for certain audited consolidated financial statements of SH Corp. Security and Sources of Payment for the Bonds The Bonds will be issued under and secured by the Supplemental Indenture. In addition, the Authority and the Corporation will enter into the Supplemental Loan Agreement with respect to the Bonds pursuant to which the Corporation will agree to make loan repayments in amounts sufficient to pay the debt service requirements on the Bonds and to maintain a Reserve Fund with respect thereto and other bonds outstanding under the Bond Indenture. The Bonds are limited obligations of the Authority payable from (i) payments made by the Corporation under the Supplemental Loan Agreement, and (ii) payments made by the Obligated Group Members under the Master Indenture Note Series 16 (the Series 16 Note ) issued under the Master Indenture, as described herein, and (iii) from amounts held by the Bond Trustee in certain funds and accounts under the Supplemental Indenture. Pursuant to the Supplemental Loan Agreement, the Authority will lend the proceeds of the Bonds to the Corporation. The Obligated Group will execute and deliver to the Authority, for assignment to the Bond Trustee, the Series 16 Note as security for the obligation to make payments pursuant to the Supplemental Loan Agreement. The Series 16 Note is the joint and several, general obligation of the current Members of the Obligated Group. Payments on the Series 16 Note are required to be in amounts sufficient to pay in full, when due, the principal of, premium, if any, and interest on the Bonds. Master Indenture Notes. The Series 16 Note will constitute a Note issued under the Master Indenture, dated as of October 15, 1987 (together with all existing Supplemental Indenture and future Supplemental Indenture permitted thereunder, the Master Indenture ), by and among the Obligated Group and U.S. Bank National Association, as master trustee (the Master Trustee ), as supplemented by the Supplemental Indenture No. 16, dated as of May 1, 2008, by and among the Obligated Group and the Master Trustee (the Supplemental Indenture No. 16 ). The Series 16 Note is a joint and several, general obligation of the Members of the Obligated Group that provides for the payment of amounts sufficient to pay the principal or Redemption Price of and interest on the Bonds, with a credit for the amounts paid by the Corporation under the Supplemental Loan Agreement. [The Master Indenture contains certain covenants to be observed and performed by the Obligated Group, including, with respect to the Bonds and the Insured Bonds, as defined herein, maintenance of a Long-Term Debt Service Coverage Ratio of 1.35 and limitations on incurrence of additional indebtedness, transfers of assets, encumbrances of the Property of the Obligated Group, and additions to or withdrawals from the Obligated Group.] See SECURITY AND SOURCES OF PAYMENT FOR THE BONDS Security Under the Master Indenture. After giving effect to the issuance of the Series 16 Note and the defeasance of the Refunded Bonds, there will be approximately $385,010,000 principal amount of Notes outstanding pursuant to the Master Indenture without regard to Notes securing liquidity facilities or swap transactions. -3-

8 Collateral Security for Master Indenture Notes. The obligations of the Corporation under the Existing Notes, as hereafter defined, and the Series 16 Note are secured on a parity basis by (i) a deed of trust on certain of the real property comprising the parcels on which SH-O and SH-S are located, together with certain land used for parking located adjacent to such facilities granted by the Corporation and SH Corp. under a Deed of Trust as described under THE DEEDS OF TRUST in APPENDIX C, which was originally granted at the time of issuance by the Corporation of the Series 1 Note relating to certain hospital revenue bonds issued by the Authority in 1987; (ii) a deed of trust on certain of the real property owned by the Corporation comprising the parcel on which SH-TP is located, granted by the Corporation under a Deed of Trust as described under THE DEEDS OF TRUST in APPENDIX C, which was originally dated as of May 1, 2006; and (iii) a security interest in certain Gross Revenues (as defined in the Master Indenture) of the Obligated Group (being generally, all revenues, Accounts, accounts receivable, contract rights and proceeds thereof), but in each case subject to release, disposition, exceptions and superior liens, all as permitted in the Master Indenture. The Master Indenture permits other entities, upon compliance with certain conditions, to become Members of the Obligated Group and to issue notes hereunder. Each Member of the Obligated Group will, subject to the right of such Member to withdraw from the Obligated Group under certain conditions, covenant to promptly make any and all payments on notes heretofore and hereafter issued under the Master Indenture, including the Series 16 Note, according to the terms thereof. Such payment requirements constitute joint and several obligations of the Members of the Obligated Group. See APPENDIX C DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF PRINCIPAL DOCUMENTS The Master Indenture for a description of the provisions permitting an entity to join, or withdraw from, the Obligated Group. Additional Indebtedness The Members of the Obligated Group, upon compliance with the terms and conditions and for the purposes described in APPENDIX C DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF PRINCIPAL DOCUMENTS The Master Indenture Limitations on Indebtedness may incur additional indebtedness. Such indebtedness, if evidenced by a Note issued under the Master Indenture, would constitute a joint and several obligation of each Member of the Obligated Group on a parity with the Series 16 Note and all other Notes outstanding under the Master Indenture. See APPENDIX A INFORMATION REGARDING THE CORPORATION AND OTHER MEMBERS OF THE OBLIGATED GROUP Selected Financial Information Regarding Liquidity and Leverage. Such indebtedness, if not so evidenced, would constitute a debt solely of the Corporation and any guarantor thereof, and not a joint and several obligations of the Members of the Obligated Group. Bondholders Risks There are a number of risks associated with the purchase of the Bonds. See BONDHOLDERS RISKS herein for a discussion of certain of these risks. Continuing Disclosure Pursuant to Rule 15c2-12 promulgated by the Securities and Exchange Commission (the Rule ), the Corporation, on behalf of itself and any future Members of the Obligated Group, will enter into a Continuing Disclosure Agreement, dated the date of delivery of the Bonds (the Disclosure Agreement ) for the benefit of the holders of the Bonds to provide certain information annually and quarterly and to provide notice of certain events to certain information repositories pursuant to the requirements of Rule. See CONTINUING DISCLOSURE herein. A form of the Disclosure Agreement is set forth in APPENDIX E hereto. -4-

9 Financial Statements The consolidated financial statements of SH Corp. as of September 30, 2007 and 2006, and for the years then ended included in APPENDIX B have been audited by Ernst & Young LLP, independent auditors, as stated in their report appearing in APPENDIX B. The consolidated financial statements include the accounts and transactions of Scottsdale Healthcare Foundation which is not a Member of the Obligated Group. For the fiscal year ended September 30, 2007, the Obligated Group represented approximately 99.6% of total revenue, 100% of income from operations, and 93% of excess of revenue over expenses in the consolidated financial statements. See APPENDIX A INFORMATION REGARDING THE CORPORATION AND OTHER MEMBERS OF THE OBLIGATED GROUP Results of Operations. Certain additional financial information with respect to the Obligated Group for the five month periods ended February 29, 2008 and February 28, 2007 are included in APPENDIX A. Special and Limited Obligations The Bonds will be the special, limited obligations of the Authority. Principal of, premium, if any, and interest on the Bonds will be payable solely from the sources provided for in the Bond Indenture and will not constitute a debt of the Authority, the City of Scottsdale, Arizona, the State of Arizona or any political subdivision thereof within the meaning of any provision of the Constitution or laws of the State of Arizona and shall not constitute or give rise to a pecuniary liability of the Authority, the City of Scottsdale, Arizona, the State of Arizona or any political subdivision thereof or a charge against the general credit or taxing powers of any of them. Availability of Documents The descriptions and summaries of various documents set forth in this Official Statement do not purport to be conclusive or definitive and reference is made to each such document for the complete details of all terms and conditions hereof. Further descriptions of the Bond Indenture, the Loan Agreement, and the Master Indenture are set forth in APPENDIX C hereto. All references herein to the Bonds, the Bond Indenture, the Loan Agreement, the Master Indenture, the Series 16 Note, and the Continuing Disclosure Agreement, is qualified in their entirety by such documents, copies of which are available from the Underwriter prior to the execution and delivery of the Bonds and thereafter may be examined or obtained at the expense of the person requesting the same at the corporate trust office of the Bond Trustee in Tempe, Arizona. Information relating to The Depository Trust Company ( DTC ) and the book-entry only system has been furnished by DTC. THE AUTHORITY The Authority is organized and existing under the Act, and is designated therein as a political subdivision of the State of Arizona. Pursuant to the Act, the Authority is empowered to issue bonds for the purposes, among others, of providing financing or refinancing for the acquisition, construction, equipping and improvement of certain health care facilities, such as those of the Corporation. The Authority has no taxing power and no source of funds for payment of its bonds other than the underlying contractual obligations made by or on behalf of users of the proceeds of its bonds. The Authority is governed by a Board of Directors, presently consisting of seven members who are elected by the Council of the City of Scottsdale, Arizona. THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY AND THE AUTHORITY WILL NOT BE OBLIGATED TO PAY DEBT SERVICE THEREON EXCEPT FROM PLEDGED REVENUES AND OTHER FUNDS PLEDGED THEREFOR. THE BONDS DO NOT -5-

10 CONSTITUTE INDEBTEDNESS OR A LOAN OF CREDIT OF THE AUTHORITY, THE CITY OF SCOTTSDALE, THE STATE OF ARIZONA OR ANY OTHER POLITICAL SUBDIVISION, AGENCY OR PUBLIC INSTRUMENTALITY THEREOF WITHIN THE MEANING OF THE CONSTITUTION OR LAWS OF THE STATE. NEITHER THE CREDIT NOR TAXING POWER OF THE AUTHORITY, THE CITY OF SCOTTSDALE, THE STATE OF ARIZONA OR ANY OTHER POLITICAL SUBDIVISION, AGENCY OR PUBLIC INSTRUMENTALITY, IS PLEDGED TO THE PAYMENT OF DEBT SERVICE ON THE BONDS. THE AUTHORITY HAS NO TAXING POWER. The Authority does not employ any staff to carry out its limited functions and contracts with independent third parties to do so. The Authority does not, and will not in the future, monitor the financial condition of the Corporation or the operation of its projects, or otherwise monitor payment of the Bonds or compliance with the documents relating thereto. The responsibility for the operation of the projects will rest entirely with the Corporation and the other Members of the Obligated Group, not with the Authority. The Authority will rely entirely upon the Bond Trustee and the Corporation to carry out their responsibilities under the Supplemental Loan Agreement and with respect to the projects. The Authority has assets and may attain additional assets in the future. However, such assets are not pledged to secure payment of the Bonds, and the Authority has no obligation or expectation of making such assets subject to the lien of the Bond Indenture. Neither the Authority nor its independent contractors have furnished, reviewed, investigated or verified the information contained in this Official Statement other than the information contained in this section. The Authority has determined that no financial or operating data concerning the Authority is material to any decision to purchase, hold or sell the Bonds, and the Authority will not provide any such information. The Authority has not, and will not, undertake any responsibilities to provide continuing disclosure with respect to the Bonds or the security therefor, and the Authority will have no liability to the Owners of the Bonds with respect to any such disclosures. The Refunding PLAN OF FINANCE The proceeds from the sale of the Bonds will be used to (i) to redeem all the Refunded Bonds, $139,300,000 of which are currently outstanding; (ii) fund an amount necessary to maintain the Reserve Fund at the Reserve Fund Requirement; and (iii) pay all or a portion of the expenses incurred in connection with the issuance and delivery of the Bonds and the refunding of the Refunded Bonds, including any swap termination fees. In order to redeem the Refunded Bonds, a portion of the proceeds of the Bonds will be deposited with the Bond Trustee in an amount, without regard to any investment thereof, that will be sufficient to pay principal of and interest on the Refunded Bonds on the applicable redemption dates of June 4, 2008 for the Series 2006A/B Bonds and June 6, 2008 for the Series 2007A Bonds. Upon deposit of such funds with the Bond Trustee, the Refunded Bonds will be considered no longer outstanding under the Bond Indenture. In connection with the original issuance of the Refunded Bonds, the Corporation entered into certain interest rate swap transactions. Those swap transactions will be terminated in connection with the refunding, and it is expected that the Corporation will need to pay a settlement amount in connection therewith. Such amount will be determined shortly before the issuance of the Bonds, and will be paid from the proceeds of the sale thereof. Thereafter, the Corporation will continue to maintain interest rate swaps on certain other outstanding variable rate debt. See Notes 10 and 17 to the consolidated audited financial statements of the Corporation attached as APPENDIX B hereto. -6-

11 ESTIMATED SOURCES AND USES OF FUNDS The following table sets forth the estimated sources and uses of proceeds of the Bonds: Sources Proceeds of the Bonds (plus net premium) $151,350,683 Total Sources 151,350,683 Uses Refund the Refunded Bonds 139,329,323 Pay swap termination costs 10,110,000 Issuance Costs (1) 1,911,360 Total Uses 151,350,683 (1) Includes Underwriter s discount, certain legal fees, printing costs, rating agency fees and miscellaneous expenses of issuance of the Bonds. -7-

12 ANNUAL DEBT SERVICE REQUIREMENTS The following table sets forth for each year ending September 30 (beginning with September 30, 2008) the estimated annual debt service requirements payable by the Members of the Obligated Group, jointly or severally, upon issuance of the Bonds, and defeasance of the Refunded Bonds, with respect to the Bonds and other Obligated Group debt. The following table does not reflect payments that might be due in the future under any contingent obligations of the Members of the Obligated Group and certain miscellaneous minor indebtedness. September 30 Year Ending Series 2008A Bonds Principal Series 2008A Bonds Interest Other Outstanding Indebtedness (1) Total 2008 $4,970,000 $1,859, $3,103, $9,933, ,240,000 7,446, ,462, ,149, ,450,000 7,234, ,464, ,149, ,585,000 7,012, ,549, ,147, ,885,000 6,783, ,479, ,147, ,150,000 6,538, ,462, ,151, ,315,000 6,281, ,551, ,147, ,670,000 6,015, ,464, ,149, ,880,000 5,732, ,534, ,147, ,220,000 5,438, ,492, ,150, ,560,000 5,127, ,464, ,151, ,885,000 4,799, ,464, ,148, ,160,000 4,454, ,536, ,151, ,590,000 4,096, ,462, ,149, ,880,000 3,717, ,549, ,147, ,005,000 3,323, ,819, ,147, ,500,000 3,123, ,528, ,151, ,905,000 2,676, ,567, ,149, ,465,000 2,209, ,472, ,146, ,100,000 1,712, ,338, ,150, ,080,000 1,234, ,835, ,150, ,930,000 1,178, ,039, ,147, ,510, , ,032, ,146, ,785, ,785, ,778, ,778, ,817, ,817, ,794, ,794, ,821, ,821, ,897, ,897, ,908, ,908, ,937, ,937, ,618, ,618, ,442, ,442, ,524, ,524, ,249, ,249, ,910, ,910, ,576, ,576, ,240, ,240, Total $150,935,000 $98,602,752 $554,978,299 $804,516,051 (1) Includes $234,075,000 in principal amount of variable rate indebtedness. The Series 2006C, D and E Bonds are assumed to bear interest at the rates of approximately 3.98%, 3.98% and 3.97% per annum, respectively, representing the fixed payment rate on related interest rate swaps, the Series 2006F Bonds are assumed to bear interest at the rate of 5.00% per annum, and the Series 2006G Bonds are assumed to bear interest at the rate of 4.57% per annum. No assurance can be given that such rates will be achieved or maintained over the term of such other indebtedness. See Note 10 to the audited financial statements of the Corporation contained in APPENDIX B hereto. Subject to de minimus rounding adjustments. -8-

13 THE BONDS The following is a summary of certain provisions of the Bonds. Reference is made to the Bonds for the complete text thereof and to the Bond Indenture for all of the provisions relating to the Bonds. The discussion herein is qualified by such reference. General The Bonds are being issued, by the Authority pursuant to the provisions of the Bond Indenture. The Bonds, when issued, will be registered in the name of Cede & Co., as nominee of DTC. Payment of the principal of, premium, if any, and interest on the Bonds will be made directly to DTC or its nominee, Cede & Co., by the Bond Trustee. See BOOK-ENTRY SYSTEM described in APPENDIX F. In the event that any of the Bonds are not in the Book-Entry System, payment of principal of, premium, if any, and interest on such Bonds will be made in accordance with the provisions of the Bond Indenture. The Bonds, as initially issued, will be fully registered bonds without coupons in denominations of $5,000 or any integral multiple thereof, and will be dated the date of original issuance for the Bonds. Each Bond subsequently issued will be dated as of the most recent Interest Payment Date (defined below) to which interest has been paid or provided for next preceding its date of issue, unless issued on an Interest Payment Date on which interest has been paid or provided for, in which event it will be dated as of such Interest Payment Date, or, if it is issued prior to the first date on which interest is paid, it will be dated the date of its initial issuance. The Bonds will mature on the dates and in the principal amounts and will bear interest at the rates per annum shown on the inside cover page of this Official Statement. Interest on the Bonds will be payable on September 1 and March 1 of each year (each an Interest Payment Date ), commencing September 1, Interest on the Bonds will be computed on the basis of a 360-day year consisting of twelve 30-day months. The Bonds are subject to redemption prior to maturity as described below. Redemption Optional Redemption. The Bonds maturing before September 1, 2019 are not subject to redemption. The Bonds maturing on and after September 1, 2019 and until and including September 1, 2023 are subject to redemption prior to maturity on or after September 1, 2018, in whole or in part at any time from such maturities as are designated by the Corporation (or, in the absence of such designation, in inverse order of maturity) and by lot within a maturity as designated by the Bond Trustee, by payment of the redemption price of 100% of the principal amount thereof plus accrued interest thereon to the redemption date The Bonds maturity on September 1, 2030 are subject to redemption prior to maturity on or after September 1, 2013, in whole or in part at any time by payment of the redemption price of 100% of the principal amount thereof plus accrued interest thereon to the redemption date. Mandatory Redemption. The Bonds maturing on September 1, 2030 are subject to mandatory redemption and shall be redeemed on September 1 in the years set forth below (the Sinking Account Retirement Dates ), in the amount of the unsatisfied portion of the corresponding Sinking Account Requirement set forth below (the Sinking Account Retirement ) for such Bonds of the same maturity, by payment of a redemption price of the principal amount of such Bonds called for redemption plus payment of the interest accrued to the date fixed for redemption, but without premium, as follows: -9-

14 Bonds due September 1, 2030 *Final maturity Sinking Account Year Requirement 2024 $8,500, ,905, ,465, ,100, ,080, ,930, * 11,510,000 Whenever Bonds are purchased, redeemed (other than pursuant to a mandatory redemption) or are delivered by the Authority or the Corporation to the Bond Trustee for cancellation at least 45 days preceding the applicable Sinking Account Retirement Date, a credit shall be given against the unsatisfied balance of the Sinking Account Requirement for such maturity with respect to the Sinking Account Retirement Dates for such maturity specified by the Corporation. The amount of such credit shall be the principal amount of the Bonds of such maturity so purchased or redeemed. In the case of Additional Bonds the amount of the credit for Bonds redeemed, purchased or delivered for cancellation by the Authority or the Corporation to the Bond Trustee prior to maturity shall be provided in the supplement authorizing their issuance. Extraordinary Optional Redemption. The Bonds, at the discretion of the Corporation, are subject to redemption prior to maturity in whole or in part at any time, in any order of maturity designated by the Corporation (or, in the absence of such designation, in inverse order of maturity) by payment of a redemption price of the principal amount of each Bond called for redemption, plus interest accrued to the date fixed for redemption, but without premium, from insurance proceeds with respect to casualty losses to or from condemnation awards from the taking of property, or sale proceeds from sales consummated under threat of condemnation of the Obligated Group, if, in the opinion of management of the Corporation, the casualty loss or condemnation will significantly and adversely affect the Obligated Group s ability to pay debt service on the Series 16 Note, as and when due. Selection of Bonds to be Redeemed In the case of any redemption in part of the Bonds, the Bonds to be redeemed by optional redemption shall be selected by the Bond Trustee, subject to any requirements of the Supplemental Indenture. A redemption of Bonds shall be a redemption of the whole or of any part of the Bonds, provided, that there shall be no partial redemption of less than $5,000. If less than all the Bonds shall be called for redemption under any provision of the Supplemental Indenture permitting such partial redemption, the particular Bonds to be redeemed shall be selected by the Bond Trustee, in such manner as the Bond Trustee in its discretion may deem fair and appropriate; provided, however (i) that the portion of any Bond to be redeemed under any provision of the Supplemental Indenture shall be in the principal amount of $5,000 or any multiple thereof, and (ii) that, in selecting Bonds for redemption, the Bond Trustee shall treat each Bond as representing that number of Bonds which is obtained by dividing the principal amount of such Bond by $5,000. If there shall be called for redemption less than all of a Bond, the Authority shall execute and deliver and the Bond Trustee shall authenticate, upon surrender of such Bond, and at the expense of the Corporation and without charge to the owner thereof, a replacement Bond in the principal amount of the unredeemed balance of the Bond so surrendered. -10-

15 Notice and Effect of Redemption In the event any of the Bonds are called for redemption, the Bond Trustee shall give notice, in the name of the Authority, at the expense of the Corporation, of the redemption of such Bonds, which notice shall: (i) specify the Bonds to be redeemed, the redemption date, the redemption price, and the place or places where amounts due upon such redemption will be payable (which shall be the principal corporate trust office of the Bond Trustee) and, if less than all of the Bonds are to be redeemed, the numbers of the Bonds, and the portions of the Bonds, so to be redeemed; (ii) state any condition to such redemption; and (iii) state that on the redemption date, and upon the satisfaction of any such condition, the Bonds to be redeemed shall cease to bear interest. CUSIP number identification shall accompany all redemption notices. Such notice may set forth any additional information relating to such redemption. Such notice shall be given by mail, postage prepaid, at least 30 days (or, in the case of acceleration of the Bonds pursuant to the Original Bond Indenture, seven days) but not more than 60 days prior to the date fixed for redemption to each Owner of a Bond to be redeemed at its address shown on the registration books kept by the Bond Trustee; provided, however, that failure to give such notice to any Bondholder or any defect in such notice shall not affect the validity of the proceedings for the redemption of any of the other Bonds. The Bond Trustee shall send a second notice of redemption by certified mail return receipt requested to any registered Owner who has not submitted Bonds called for redemption 30 days after the redemption date, provided, however, that the failure to give any second notice by mailing, or any defect in such notice, shall not affect the validity of any proceedings for the redemption of any of the Bonds and the Bond Trustee shall not be liable for any failure by the Bond Trustee to send any second notice. Any Bonds and portions of Bonds which have been duly selected for redemption and which are paid in accordance with the Supplemental Indenture shall cease to bear interest on the specified redemption date. Any notice given pursuant to the Supplemental Indenture may be rescinded by written notice given to the Bond Trustee by the Corporation no later than five (5) business days prior to the date specified for redemption. The Bond Trustee shall give notice of such rescission as soon thereafter as practicable, in the same manner, and to the same Persons, as notice of redemption was given. Any notice of redemption is conditioned upon the Bond Trustee s receipt of sufficient moneys. Mutilated, Destroyed, Lost and Stolen Bonds If (i) any mutilated Bond is surrendered to the Bond Trustee, or the Bond Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Bond, and (ii) there is delivered to the Bond Trustee and the Authority such security or indemnity as the Bond Trustee may require to hold the Authority and the Bond Trustee harmless, then, in the absence of notice to the Bond Trustee that such Bond has been acquired by a bona fide purchaser and upon the Owner paying the reasonable expenses of the Bond Trustee and of any security or indemnity bond required by the Bond Trustee, the Authority shall cause to be executed (but need not prepare) and the Bond Trustee shall authenticate and deliver, in exchange for such mutilated Bond or in lieu of such destroyed, lost or stolen Bond, a new Bond of like principal amount, date and tenor. If any such mutilated, destroyed, lost or stolen Bond has become or will on or before the next Bond Payment Date become, due and payable, the Bond Trustee may, in its discretion, pay such Bond when due instead of delivering a new Bond. Registration, Transfer and Exchange of Bonds The Bonds shall be negotiable, subject to the provisions for registration and transfer contained in the Bond Indenture or in the Bonds. So long as any Bonds are Outstanding, the Bond Trustee shall maintain at its offices books for the registration and transfer of Bonds, and shall provide for the registration and transfer of any Bond under such reasonable regulations as the Bond Trustee may prescribe. The Bond Trustee shall act as bond registrar for purposes of exchanging and registering Bonds -11-

16 in accordance with the provisions of the Bond Indenture. Each Bond shall be transferable only upon the registration books maintained by the Bond Trustee, by the Owner thereof in person or by his attorney duly authorized in writing, upon surrender thereof together with a written instrument of transfer satisfactory to the Bond Trustee duly executed by the registered Owner or his duly authorized attorney. Upon surrender for transfer of any Bond, the Authority shall cause to be executed (but need not prepare) and the Bond Trustee shall authenticate and deliver, in the name of the transferee, one or more new Bonds of the same aggregate principal amount at maturity, as appropriate, and the same maturity as the surrendered Bond. Any Bond, upon surrender thereof to the Bond Trustee together with written instructions satisfactory to the Bond Trustee, duly executed by the registered Owner or his attorney duly authorized in writing, may, at the option of the registered Owner thereof, be exchanged for an equal aggregate principal amount at maturity, as appropriate, of Bonds with the same maturity of any other authorized denominations. All Bonds surrendered in any exchange or transfer of Bonds shall forthwith be cancelled by the Bond Trustee. In connection with any such exchange or transfer of Bonds the Owner requesting such exchange or transfer shall as a condition precedent to the exercise of the privilege of making such exchange or transfer remit to the Bond Trustee an amount sufficient to pay any tax or other governmental charge required to be paid with respect to such exchange or transfer; provided, however, that no such amount shall be payable by the Owner in the case of the issuance of any Bond or Bonds for the unredeemed portion of a Bond surrendered for redemption. The Bond Trustee may but shall not be obligated to exchange or register the transfer of any Bond (i) which has been called or selected for call for redemption in whole or in part or (ii) during a period of 15 days preceding the selection of Bonds to be redeemed for the purpose of the giving of a notice of redemption. If the transfer of any Bond which has been called or selected for call for redemption in whole or in part is registered, any notice of redemption which has been given to the transferor shall be binding upon the transferee and a copy of the notice of redemption shall be delivered by the Bond Trustee to the transferee along with the Bond or Bonds. -12-